October 24th – Top Stories

The stiffest test facing congressional GOP leaders is how to avoid another Obamacare-induced fiscal crisis, which top Republicans say would put their House majority in jeopardy and further deplete the party’s uphill chances of capturing control of the Senate.

Two different tactics are on display: In the House, the approach is to be meek; in the Senate, it’s to be muscular.

2/ China

- China Money Rate Jumps Most in Two Months as Cash Injections End - Bloomberg – By Bloomberg News

China’s money-market rate jumped the most in two months as the central bank refrained from injecting cash in open-market operations for the third auction in a row amid signs of a pickup in Asia’s biggest economy.

The People’s Bank of China has suspended reverse-repurchase contracts since Oct. 17, after offering seven- or 14-day agreements at twice-weekly auctions for more than three months. The PBOC drained a net 58 billion yuan ($9.5 billion) from the financial system this week as reverse repos matured, according to Chen Long, an analyst at Bank of Dongguan. It withdrew 44.5 billion yuan last week, data compiled by Bloomberg show.

- Strong new orders lift China HSBC flash PMI to 7-month high in October - Reuters – By Natalie Thomas

Strong new orders drove the fastest expansion in China’s manufacturing sector in seven months in October, a preliminary survey showed on Thursday, more evidence that the economy is stabilizing although a strong rebound remains elusive.

Euro-area banks are likely to step up efforts to bolster their finances after the European Central Bank outlined its plans to scrutinize their health.

“I expect higher provisions from banks in the fourth quarter, ahead of the ECB’s review,” Ronny Rehn, an analyst with Keefe, Bruyette & Woods in London, said in a phone interview. “All the banks will be stressed, so all the banks have similar incentives to look better.”

The ECB will go through the accounts of about 124 of the region’s banks in a three-step process starting next month. Examiners will first identify potentially problematic loans, then review banks’ balance sheets in early 2014 and conduct stress tests before officially taking over as banking regulator a year from now, the central bank said today.